Sachem Capital Corp.
For the period ended Jun 30, 2026. Filed Aug 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 5, 2026
SACH$0.82+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-20.
0001682220-26-000038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001682220-26-000053
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 109 previous paragraphs and 163 current paragraphs.
72 unchanged; 31 reworded; 24 added; 6 removed; 0 previous and 36 current paragraphs rearranged.
Tables are not compared: 12 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
Portfolio and Asset Management Updates
Current report
Coconut Grove, Florida. Subsequent to June 30, 2026, one of the loans to the related-party joint venture was repaid in full following the sale of the underlying Coconut Grove, Florida residence. The residence sold for gross sale proceeds of approximately $7.5 million and generated net sale proceeds of approximately $7.0 million. The Company received approximately $7.0 million in cash to repay the associated loan in full. Of the two remaining residences, one is complete and actively marketed for sale, and the other is expected to be completed and placed on the market during the fourth quarter of 2026.
Current report
Vela Cove—Naples, Florida. Through the date of this Report, we completed improvements to the common areas of the completed North Building, including the rooftop and pool, and rebranded the project, formerly known as The Nautilus, as Vela Cove. We engaged a new marketing and listing team for the three completed North Building residences and for pre-sales of the four planned South Building residences. We reengaged the South Building architect under a comprehensive agreement covering completion and coordination of the construction plans, and that work is underway. We also completed negotiations with the selected general contractor and currently expect substantive construction work on the South Building parcel to commence in early fourth quarter 2026. Urbane Capital, our in-house asset management and development platform, continues to oversee the development and monetization of the project.
Current report
Our Mortgage Loan Portfolio
Current report
We have fully rebranded the Naples, Florida condominium project included above as Vela Cove and relaunched full-scale marketing for the three completed north building residences currently available for sale. We have also awarded the architect and construction contracts and expect to break ground on the four-unit south building parcel early fourth quarter 2026. Presale activity on the south building units is expected to occur alongside of the completed unit marketing efforts.
Current report
Provision for credit losses related to loans held for investment - increased from the corresponding period in the prior year primarily due to declines in collateral valuations for loans previously reserved and new nonperforming loans. The current quarter provision was concentrated in three specific loans, which accounted for approximately $2.7 million of loan-specific provision activity. This included approximately $0.7 million associated with charge-offs of related receivable balances in connection with the foreclosure process and transfer of the collateral securing one of the loans to real estate owned. The loan-specific activity was partially offset by an approximately $0.1 million net decrease in the collective reserve for the remaining portfolio and other loan-specific reserves.
Current report
Total other income decreased from the corresponding period in the prior year.
Current report
Net (loss) income and net (loss) income attributable to common shareholders
Current report
Net (loss) income and net (loss) income attributable to common shareholders- Operating results for the second quarter of 2026 were negatively impacted by a decrease in net interest margin, the $2.6 million provision for credit losses described above, which was concentrated in three specific loans, and $2.6 million of transaction expenses associated with the pending contribution transaction..
Current report
The three month period’s net loss affecting book value per common share was materially driven by (i) the provision for credit losses related to loans held for investment of $2.6 million, or approximately $0.05 per common share, which was concentrated in three specific loans as described above, and (ii) transaction expenses associated with the pending contribution transaction of $2.6 million, or approximately $0.05 per common share. The aggregate impact of these items was approximately $5.2 million, or $0.10 per common share.
Current report
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Current report
Net interest income
Current report
•Average loans held for investment were $356.9 million and $376.5 million for the six months ended June 30, 2026 and 2025, respectively. The effective yield on total loans held for investment was 9.0% and 8.2%, respectively.
Current report
•Average total performing loans held for investment were $256.2 million and $271.8 million for the six months ended June 30, 2026 and 2025, respectively. The effective yield on performing loans was 12.5% and 11.3%, respectively.
Current report
•Average nonperforming loans held for investment were $100.7 million and $104.7 million for the six months ended June 30, 2026 and 2025, respectively.
Current report
See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2026.
Current report
Net Interest Margin
Current report
In addition to the above non-cash Naples, Florida loan loss, the provision includes three specific loans which accounted for approximately $2.7 million of loan-specific provision activity during the second quarter. This included approximately $0.7 million associated with charge-offs of related receivable balances in connection with the foreclosure process and transfer of the collateral securing one of the loans to real estate owned.
Current report
Total other income
Current report
Total other income decreased from the corresponding period in the prior year.
Current report
Total operating expenses
Current report
Net (loss) income and net (loss) income attributable to common shareholders
Current report
Net (loss) income and net (loss) income attributable to common shareholders- Operating results for the six month period of 2026 were negatively impacted by a decrease in net interest margin, the $6.6 million specific provisions for credit losses described above, which was concentrated in four specific loans, and $4.2 million of transaction expenses associated with the pending contribution transaction..
Current report
Book value per common share
Removed paragraphs (6)
Previous report
The Closing of the Transaction is expected to occur by the end of 2026, subject to customary closing conditions, including the approval of our shareholders.
Previous report
Our Loan Portfolio
Previous report
Total other income remained relatively consistent from the corresponding period in the prior year, with underlying components shifting in composition rather than magnitude.
Previous report
Net (loss) income and net loss attributable to common shareholders
Previous report
Net (loss) income and net loss attributable to common shareholders- Operating results for the first quarter of 2026 were negatively impacted by increases in valuation allowances, discounted cash flow fair value adjustment on loan restructuring recorded in provision for credit losses related to loans held for investment, and transaction expenses.
Previous report
For a detailed breakdown of our cash flows during the three months ended March 31, 2026 and 2025, see our Condensed Consolidated Statement of Cash Flows.
Reworded paragraphs (31)
Previous wording
Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 2017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company operates its business as one segment. The Company offers short-term (i.e., one to three years), secured, non-bank loans to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States. The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is typically secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. The Company does not lend to owner occupants of residential real estate. The Company’s primary underwriting criteria is a conservative loan to value ratio. In addition, the Company may make opportunistic real estate purchases and investments apart from its lending activities.
Current wording
Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 2017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. We operate its business as one segment. We offer short-term (i.e., one to three years), secured, non-bank loans to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States. The properties securing our loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is typically secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. We do not lend to owner occupants of residential real estate. Our primary underwriting criterion is a conservative loan to value ratio. In addition, we may make opportunistic real estate purchases and investments apart from its lending activities.
Previous wording
Prior to the closing of the Transaction (the “Closing”), which is expected to be by the end of 2026, we will complete a series of pre-closing reorganization steps (the “Pre-Closing Reorganization”), including (i) forming the Operating Partnership and contributing all or substantially all of our assets thereto, (ii) redomesticating from the State of New York to the State of Delaware, (iii) effecting a 20-to-1 reverse stock split of our issued and outstanding common shares, following which such shares will be redesignated as our Class A common stock (the “Class A Shares”), (iv) authorizing a new class of Class B Common Stock (the “Class B Shares”), (v) adjusting the conversion and anti-dilution rights applicable to our issued and outstanding preferred stock in accordance with the applicable certificate of designations to reflect the reverse stock split, and (vi) changing our corporate name to “IRG Realty Trust, Inc.”
Current wording
Prior to the closing of the Transaction (the “Closing”), we will complete a series of pre-closing reorganization steps (the “Pre-Closing Reorganization”), including (i) forming the Operating Partnership and contributing all or substantially all of our assets thereto, (ii) redomesticating from the State of New York to the State of Delaware, (iii) effecting a 20-to-1 reverse stock split of our issued and outstanding common shares, following which such shares will be redesignated as our Class A common stock (the “Class A Shares”), (iv) authorizing a new class of Class B Common Stock (the “Class B Shares”), (v) adjusting the conversion and anti-dilution rights applicable to our issued and outstanding preferred stock in accordance with the applicable certificate of designations to reflect the reverse stock split, and (vi) changing our corporate name to “IRG Realty Trust, Inc.”
Previous wording
The number of OP Units and Class B Shares to be issued to IRG Global at the Closing (the “Transferee Consideration Units”) will be calculated based on a formula set forth in the Contribution Agreement, subject to downward adjustment based on the aggregate shortfall in replacement value for any dispositions of IRG Master Holdings’ properties occurring during the Interim Period (as defined in the Contribution Agreement), other than dispositions with an aggregate shortfall of less than $3.0 million. The calculation of the Transferee Consideration Units was based on an assumed implied gross asset value of the IRG Global portfolio to be contributed of approximately $2.9 billion, with a net asset value of approximately $1.5 billion after approximately $1.4 billion of debt, and a deemed exchange value of our common shares at a price of $2.00 per share. Immediately following the Closing, IRG Global is expected to hold approximately 94.1% of the outstanding OP Units, with us retaining the remaining approximately 5.9% of the outstanding OP Units. Subject to certain restrictions, a holder of OP Units may require the Operating Partnership to exchange all or a portion of such holder’s OP Units for cash or, at our option, Class A Shares on a one-for-one basis, subject to the ownership, transfer, REIT qualification and other limitations set forth in an Amended and Restated Limited Partnership Agreement, which is expected to be executed in connection with the Closing of the Transaction.
Current wording
The number of OP Units and Class B Shares to be issued to IRG Global at the Closing (the “Transferee Consideration Units”) will be calculated based on a formula set forth in the Contribution Agreement, subject to downward adjustment based on the aggregate shortfall in replacement value for any dispositions of IRG Master Holdings’ properties occurring during the Interim Period (as defined in the Contribution Agreement), other than dispositions with an aggregate shortfall of less than $3.0 million. The calculation of the Transferee Consideration Units was based on an assumed implied gross asset value of the IRG Global portfolio to be contributed of approximately $2.9 billion, with a net asset value of approximately $1.5 billion after approximately $1.4 billion of debt, and a deemed exchange value of our common shares at a price of $2.00 per share. Immediately following the Closing, IRG Global is expected to hold approximately 94.1% of the outstanding OP Units, with us retaining the remaining approximately 5.9% of the outstanding OP Units. Subject to certain restrictions, a holder of OP Units may require the Operating Partnership to exchange all or a portion of such holder’s OP
Previous wording
For additional information on the Contribution Agreement, see our Current Report on Form 8-K filed with the SEC on May 18, 2026 and Note 21 – Subsequent Events – to our accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Current wording
For additional information on the Contribution Agreement, see our Current Report on Form 8-K filed with the SEC on May 18, 2026 and Note 1 – The Company, Contribution Agreement with Industrial Realty Group Global, LLC – to our accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Previous wording
The following table presents certain information regarding our real estate lending activities for the three months ended March 31, 2026:
Current wording
The following table presents certain information regarding our real estate lending activities for the three and six months ended June 30, 2026:
Previous wording
Our allowance for credit losses is influenced by historical loss experience, current exposure by geographical region, current expected credit losses on loans in foreclosure based on fair value less cost to sell, non-performing status, and other supportable forecasts of economic conditions. A loan is considered non-performing once it has been delinquent on its monthly payments more than 90 days.
Current wording
Our allowance for credit losses is influenced by historical loss experience, current exposure by geographical region, current expected credit losses on loans in foreclosure based on fair value less cost to sell, non-performing status, and other supportable forecasts of economic conditions. A loan is considered non-performing once it has been delinquent on its monthly payments 90 days or more.
Previous wording
As of March 31, 2026, we owned eight properties that were classified as investments in developmental real estate. The projects are in various phases of completion. The following table details the carry value of our investments in developmental real estate owned property reflected on our unaudited Condensed Consolidated Balance Sheet as of March 31, 2026:
Current wording
As of June 30, 2026, we owned five projects that were classified as investments in developmental real estate. The projects are in various phases of completion. The following table details the carrying value of our investments in developmental real estate owned property reflected on our unaudited Condensed Consolidated Balance Sheet as of June 30, 2026:
Previous wording
As of March 31, 2026, we owned twelve properties, each of which previously served as collateral for first mortgage loans. The following table presents the carrying value of each of our properties reflected on our unaudited Condensed Consolidated Balance Sheet as of March 31, 2026:
Current wording
As of June 30, 2026, we owned eleven properties, each of which previously served as collateral for first mortgage loans. The following table presents the carrying value of each of our properties reflected on our unaudited Condensed Consolidated Balance Sheet as of June 30, 2026:
Previous wording
Net (loss) income and net loss attributable to common shareholders are the primary metrics by which we assess our business performance. Accordingly, we closely monitor the following primary drivers of these metrics:
Current wording
Net (loss) income and net (loss) income attributable to common shareholders are the primary metrics by which we assess our business performance. Accordingly, we closely monitor the following primary drivers of these metrics:
Previous wording
•Average loans held for investment were $365.5 million and $370.3 million for the three months ended March 31, 2026 and 2025, respectively. The effective yield on total loans held for investment was 10.0% and 8.5%, respectively.
Current wording
•Average loans held for investment were $346.7 million and $376.3 million for the three months ended June 30, 2026 and 2025, respectively. The effective yield on total loans held for investment was 8.4% and 8.0%, respectively.
Previous wording
•Average total performing loans held for investment were $270.9 million and $275.1 million for the three months ended March 31, 2026 and 2025, respectively. The effective yield on performing loans was 13.5% and 11.5%, respectively.
Current wording
•Average total performing loans held for investment were $254.3 million and 262.7 million for the three months ended June 30, 2026 and 2025, respectively. The effective yield on performing loans was 11.4% and 11.4%, respectively.
Previous wording
•Average nonperforming loans held for investment were $95.7 million and $97.3 million for the three months ended March 31, 2026 and 2025, respectively.
Current wording
•Average nonperforming loans held for investment were $92.4 million and $113.6 million for the three months ended June 30, 2026 and 2025, respectively.
Previous wording
Interest income from limited liability company investments - Interest income generated from our investments in the Shem Creek funds and direct loan co-investment vehicles decreased from the corresponding period in the prior year. The decrease was primarily attributable to lower average capital deployed within certain direct loan co-investment vehicles during 2026. As underlying mortgage loans repaid, capital was returned to us and not redeployed at prior levels within those structures. In certain vehicles, our ownership percentage also declined during the period, further reducing its effective exposure.
Current wording
Interest income from limited liability company investments - Interest income generated from our investments in the Shem Creek funds and direct loan co-investment funds decreased from the corresponding period in the prior year. The decrease was primarily attributable to lower average capital deployed within certain direct loan co-investment funds during 2026. As underlying mortgage loans repaid, capital was returned to us and not redeployed at prior levels within those structures. In certain vehicles, our ownership percentage also declined during the period, further reducing its effective exposure.
Previous wording
See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements for the three months ended March 31, 2026.
Current wording
See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2026.
Previous wording
Interest expense and amortization of deferred financing costs - consistent with the corresponding period in the prior year, primarily attributable to lower average borrowings but at higher average interest rates.
Current wording
Interest expense and amortization of deferred financing costs - increased from the corresponding period in the prior year, primarily attributable to similar average borrowings but at higher average interest rates.
Previous wording
During 2025, as a result of maturing unsecured notes payable, we began repositioning its capital structure through the issuance of $100.0 million ($100.0 million and $90.0 million drawn as of March 31, 2026 and December 31, 2025, respectively) of Senior Secured Notes due 2030. The secured notes replaced a portion of lower rate unsecured notes and reduced reliance on repurchase agreements and lines of credit.
Current wording
During 2025, as a result of maturing unsecured notes payable, we began repositioning our capital structure through the issuance of $100.0 million ($100.0 million and $90.0 million drawn as of June 30, 2026 and December 31, 2025, respectively) of Senior Secured Notes due 2030. The secured notes replaced a portion of lower rate unsecured notes and reduced reliance on repurchase agreements and lines of credit.
Previous wording
Net interest margin in the first quarter of 2026 was 3.9% compared to 4.0% in the first quarter of 2025. The decrease in net interest margin reflects both structural and cyclical factors. Structurally, refinancing activity during 2025 increased the weighted average cost of capital. Cyclically, lower average earning assets reduced interest-earning balances.
Current wording
Net interest margin in the second quarter of 2026 was 1.9% compared to 2.3% in the second quarter of 2025. The decrease in net interest margin reflects both structural and cyclical factors. Structurally, refinancing activity during 2025 increased the weighted average cost of capital. Cyclically, lower average earning assets reduced interest-earning balances.
Previous wording
While asset yields remained strong on performing loans, 13.5% in first quarter 2026 as compared to 11.5% in the first quarter 2025, overall margin stabilization depends on continued resolution of nonperforming loans, normalization of earning asset levels, and disciplined origination activity at spreads consistent with current funding costs.
Current wording
While asset yields remained strong on performing loans, 11.4% in second quarter 2026 as compared to 11.4% in the second quarter 2025, overall margin stabilization depends on continued resolution of nonperforming loans, normalization of earning asset levels, and disciplined origination activity at spreads consistent with current funding costs.
Previous wording
Net interest (loss) income after provision for credit losses, loss on sale of loans, and changes in valuation allowance
Current wording
Net interest (loss) income after provision for credit losses, and changes in valuation allowance
Previous wording
Other income - Other income consists primarily of ancillary revenue streams, including property-related income and miscellaneous recoveries. The increase from the corresponding period in the prior year reflects rents recognized on certain investments in developmental real estate and real estate owned and certain non-recurring recoveries.
Current wording
Other income - Other income consists primarily of ancillary revenue streams, including property-related income and miscellaneous recoveries. The decrease from the corresponding period in the prior year reflects rent recognized on the Westport, CT investments in developmental real estate during 2025 which were disposed of in December 2025.
Previous wording
Recovery of impairment loss on real estate owned - increased from the corresponding period in the prior year and relates to specific property-level valuation adjustments following updated market data and liquidation timelines.
Current wording
Impairment loss on real estate owned - increased from the corresponding period in the prior year and relates to specific property-level valuation adjustments following updated market data and liquidation timelines.
Previous wording
Gain on sale of investments in developmental real estate, real estate owned and property and equipment, net - The current period reflects gains realized on the disposition of select real estate assets and developmental projects.
Current wording
Gain on sale of investments in developmental real estate, real estate owned and property and equipment, net - increased from the corresponding period in the prior year. Each period reflects gains realized on the disposition of select real estate assets and developmental projects during the period.
Previous wording
Other expenses - increased from the corresponding period in the prior year and primarily reflect operating costs associated with real estate owned, legal matters, and portfolio servicing.
Current wording
Other expenses - decreased from the corresponding period in the prior year and primarily reflect operating costs associated with real estate owned, income taxes, legal matters, public company expenses, and portfolio servicing.
Previous wording
Average loans outstanding are calculated using the arithmetic average of the unpaid principal balance of loans held for investment as of the end of each of the five most recent fiscal quarters.
Current wording
Average loans outstanding are calculated using the arithmetic average of the unpaid principal balance of loans held for investment as of the end of each of the three most recent fiscal quarters.
Previous wording
Provision for credit losses related to loans held for investment - increased from the corresponding period in the prior year primarily due to declines in collateral valuations for loans previously reserved and a credit loss of $3.9 million related to a loan restructuring. This non-cash loss relates to the Naples, Florida loan restructuring where we took control of the three completed condominium units and entitled land for development of four additional condominium units which is treated as a deed in lieu of foreclosure for accounting purposes. The loan restructuring was negotiated by management to recover the full carrying value of the mortgage note receivable on an undiscounted cash flow basis. Due to the length of time between taking over the project and receipt of the final cash flows from sales of the units under construction, we are required to record the assets received on a discounted cash flow basis. As a result, we recorded a $3.9 million charge in first quarter 2026. We believe the sales of the condominium units provides an opportunity to recover the fair value adjustment over time; however, actual recovery will depend on sales prices, timing, completion costs and market conditions.
Current wording
Provision for credit losses related to loans held for investment - increased from the corresponding period in the prior year primarily due to declines in collateral valuations for loans previously reserved, new nonperforming loans, and a credit loss of $3.9 million related to a specific loan restructuring. This non-cash loss relates to the Naples, Florida loan restructuring where we took control of the three completed condominium units and entitled land for development of four additional condominium units which is treated as a deed in lieu of foreclosure for accounting purposes. The loan restructuring was negotiated by management to recover the full carrying value of the mortgage note receivable on an undiscounted cash flow basis. Due to the length of time between taking over the project and receipt of the final cash flows from sales of the units under construction, we are required to record the assets received on a discounted cash flow basis. As a result, we recorded a $3.9 million charge in first quarter 2026. We believe the sales of the condominium units provides an opportunity to recover the fair value adjustment over time; however, actual recovery will depend on sales prices, timing, completion costs and market conditions.
Previous wording
Loss on equity securities - The balance includes net mark-to-market losses on equity securities held within the investment portfolio. These losses reflect changes in fair value and are inherently subject to market volatility.
Current wording
(Loss) gain on equity securities - The balance includes net mark-to-market gains on equity securities held within the investment portfolio. These losses and gains reflect changes in fair value and are inherently subject to market volatility.
Previous wording
The decrease in book value per common share is primarily due to cash dividends declared and paid for the three months ended March 31, 2026 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $3.5 million, or $0.07 per common share, and net loss attributable to common shareholders for the three months ended March 31, 2026 of $6.1 million, or $0.13 per common share.
Current wording
The decrease in book value per common share is primarily due to cash dividends declared and paid for the six months ended June 30, 2026 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $5.1 million, or $0.11 per common share, and net loss for the six months ended June 30, 2026 of $11.5 million, or $0.24 per common share.
Previous wording
This quarter's net loss impacting the book value per common share was materially driven by 1) the non-cash discounted cash flow fair value adjustment on loan restructuring recorded in provision for credit losses related to loans held for investment of $3.9 million, or $0.08 per common share, and 2) contribution transactional expenses of $1.6 million or $0.03 per common share. The aggregate impact of both events is $5.5 million, or $0.11 per common share of book value decline from year end.
Current wording
This six month period's net loss impacting the book value per common share was materially driven by i) the non-cash discounted cash flow fair value adjustment on loan restructuring recorded in provision for credit losses related to loans held for investment of $3.9 million, or $0.08 per common share, ii) contribution transactional expenses of $4.2 million or $0.09 per common share and iii) the second-quarter provision for credit losses related to loans held for investment of $2.6 million, or approximately $0.05 per common share, which was concentrated in three specific loans as described earlier. The aggregate impact of these events is $10.7 million, or $0.22 per common share of book value decline from year end.
Previous wording
Total assets at March 31, 2026 were $473.3 million compared to $460.0 million at December 31, 2025, an increase of $13.3 million, or 2.9%. The increase was due primarily to increases in investments in developmental real estate of $36.3 million and other assets of $4.0 million offset by decreases in loans held for investment, net of $22.5 million and investments in limited liability companies of $3.9 million. The increase in investments in developmental real estate and decrease in loans held for investment, net is primarily driven by the Nautilus loan restructuring as described elsewhere in this report.
Current wording
Total assets at June 30, 2026 were $472.9 million compared to $460.0 million at December 31, 2025, an increase of $12.9 million, or 2.8%. The increase was due primarily to increases in cash of $17.9 million, real estate owned, net of $4.6 million, investments in developmental real estate of $35.8 million and other assets of $3.8 million offset by decreases in loans held for investment, net of $41.4 million, due from borrowers, net of $2.6 million and investments in limited liability companies of $4.9 million. The increase in investments in developmental real estate and decrease in loans held for investment, net is primarily driven by the Naples, Florida loan restructuring in the first quarter of 2026.
Previous wording
Total liabilities at March 31, 2026 were $307.7 million compared to $285.1 million at December 31, 2025, an increase of $22.6 million, or 7.9%. This increase is primarily due to increases in senior secured notes payable of $10.1 million, lines of credit of $10.0 million and advances from borrowers of $1.3 million.
Current wording
Total liabilities at June 30, 2026 were $314.1 million compared to $285.1 million at December 31, 2025, an increase of $29.0 million, or 10.2%. This increase is primarily due to increases in senior secured notes payable of $10.3 million, lines of credit of $17.5 million and accounts payable and accrued liabilities of $1.4 million offset by a decrease in advances from borrowers of $0.9 million.
Previous wording
Total shareholders’ equity at March 31, 2026 was $165.6 million compared to $174.9 million at December 31, 2025, a decrease of $9.3 million, or 5.3%. This decrease was due primarily to an aggregate of $3.5 million of dividends paid to holders of Series A Preferred Stock and common shares during the quarter and a net loss of $6.1 million for the period, offset by a $0.3 million increase in additional paid-in capital related to stock-based compensation.
Current wording
Total shareholders’ equity at June 30, 2026 was $158.8 million compared to $174.9 million at December 31, 2025, a decrease of $16.1 million, or 9.2%. This decrease was due primarily to an aggregate of $5.1 million of dividends paid to holders of Series A Preferred Stock and common shares during the period and a net loss of $11.4 million for the period (inclusive of $4.2 million of transaction expenses) offset by a $0.4 million increase in additional paid-in capital related to stock-based compensation.
Rearranged current paragraphs (36)
Current report — wording carried from elsewhere
Units for cash or, at our option, Class A Shares on a one-for-one basis, subject to the ownership, transfer, REIT qualification and other limitations set forth in an Amended and Restated Limited Partnership Agreement, which is expected to be executed in connection with the Closing of the Transaction.
Current report — wording carried from elsewhere
Average loans outstanding are calculated using the arithmetic average of the unpaid principal balance of loans held for investment as of the beginning and the end the quarter.
Current report — wording carried from elsewhere
Interest income from loans - decreased from the corresponding period in the prior year, as further analyzed below.
Current report — wording carried from elsewhere
We evaluate these minority investments as part of its broader capital allocation framework. Given the short-term nature of the underlying assets and the return of capital upon loan repayment, investment balances may fluctuate period to period depending on repayment activity and redeployment decisions. Capital returned from these funds may be redeployed into other investment opportunities or retained to support liquidity and balance sheet objectives.
Current report — wording carried from elsewhere
Gain on equity securities - The balance includes net mark-to-market gains on equity securities held within the investment portfolio. These gains reflect changes in fair value and are inherently subject to market volatility.
Current report — wording carried from elsewhere
General and administrative expenses - increased modestly from the corresponding period in the prior year due to additional costs associated with our investments in developmental real estate, real estate owned, and increased director fees.
Current report — wording carried from elsewhere
Transaction expenses - expenses in the current year are associated with an announced contribution transaction as described earlier in the Recent Developments section. Additional material costs are expected to be incurred until that transaction closes.
Current report — wording carried from elsewhere
The decrease in book value per common share is primarily due to cash dividends declared and paid for thethree months ended June 30, 2026 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $1.6 million, or $0.03 per common share, and net loss for thethree months ended June 30, 2026 of $5.4 million, or $0.11 per common share.
Current report — wording carried from elsewhere
Net (loss) income and net (loss) income attributable to common shareholders are the primary metrics by which we assess our business performance. Accordingly, we closely monitor the following primary drivers of these metrics:
Current report — wording carried from elsewhere
Net interest income represents the largest component of net income and is evaluated on both an absolute basis and relative to our provision for credit losses and operating expenses. Net interest income is generated when the yield earned on our loan portfolio exceeds the cost of financing those assets, which we primarily achieve through short- and long-term financing arrangements. Accordingly, we actively monitor financing market conditions and maintain ongoing dialogue with investors and financial institutions as we evaluate funding sources and cost of capital.
Current report — wording carried from elsewhere
In evaluating net interest income, management monitors: (1) portfolio loan yields, (2) funding costs, (3) net interest spread, and (4) net interest margin. Net interest spread reflects the difference between the yield earned on our loans and the interest rates paid on our funding sources. Net interest margin represents net interest income, calculated as annualized interest income less annualized interest expense, expressed as a percentage of average loans outstanding for the applicable period.
Current report — wording carried from elsewhere
Changes in net interest income are primarily driven by origination activity, changes in average outstanding loan balances (total, performing and nonperforming), and fluctuations in interest rates affecting asset yields and funding costs. Historically, portfolio growth driven by loan originations has been the primary contributor to increases in net interest income. Net interest income is evaluated both before and after interest expense associated with corporate debt and before and after provisions for credit losses.
Current report — wording carried from elsewhere
Results are impacted by nonperforming loans and real estate owned, which do not contribute interest income.
Current report — wording carried from elsewhere
The difference between total portfolio yield and performing loan yield reflects the impact of nonaccrual loans, which do not generate current interest income.
Current report — wording carried from elsewhere
Interest income from limited liability company investments - Interest income generated from our investments in the Shem Creek funds and direct loan co-investment funds decreased from the corresponding period in the prior year. The decrease was primarily attributable to lower average capital deployed within certain direct loan co-investment funds during 2026. As underlying mortgage loans repaid, capital was returned to us and not redeployed at prior levels within those structures. In certain vehicles, our ownership percentage also declined during the period, further reducing its effective exposure.
Current report — wording carried from elsewhere
The decrease in interest income was driven by lower average invested balances rather than changes in underlying loan yields or credit performance. The Shem Creek portfolios continue to consist primarily of short-duration, first mortgage loans, and there were no material changes in the contractual economics of those investments during the period.
Current report — wording carried from elsewhere
Interest expense and amortization of deferred financing costs - increased from the corresponding period in the prior year, primarily attributable to similar average borrowings but at higher average interest rates.
Current report — wording carried from elsewhere
During 2025, as a result of maturing unsecured notes payable, we began repositioning our capital structure through the issuance of $100.0 million ($100.0 million and $90.0 million drawn as of June 30, 2026 and December 31, 2025, respectively) of Senior Secured Notes due 2030. The secured notes replaced a portion of lower rate unsecured notes and reduced reliance on repurchase agreements and lines of credit.
Current report — wording carried from elsewhere
We continue to evaluate refinancing strategies for upcoming maturities late 2026 and into 2027, with a focus on extending duration and optimizing cost of capital. Access to diversified funding sources remains a strategic priority as we balance liquidity, leverage, and shareholder returns.
Current report — wording carried from elsewhere
Net interest margin in the six month period of 2026 was 2.9% compared to 3.2% in the six month period of 2025. The decrease in net interest margin reflects both structural and cyclical factors. Structurally, refinancing activity during 2025 increased the weighted average cost of capital. Cyclically, lower average earning assets reduced interest-earning balances.
Current report — wording carried from elsewhere
While asset yields remained strong on performing loans, 12.5% in the six month period of 2026 as compared to 11.3% in the six month period of 2025, overall margin stabilization depends on continued resolution of nonperforming loans, normalization of earning asset levels, and disciplined origination activity at spreads consistent with current funding costs.
Current report — wording carried from elsewhere
Net interest (loss) income after provision for credit losses, and changes in valuation allowance
Current report — wording carried from elsewhere
Credit risk management is central to our operating model. We seek to minimize credit losses through disciplined underwriting, active life-of-loan portfolio management, and targeted special servicing. We closely monitor portfolio credit performance, including delinquency trends and expected and realized credit losses, as a key indicator of overall operating results.
Current report — wording carried from elsewhere
We continue to apply a conservative collateral-dependent methodology for loans in foreclosure and pending foreclosure status. We evaluate the allowance quarterly based on updated appraisals, liquidation cost assumptions and macroeconomic forecasts under the CECL framework.
Current report — wording carried from elsewhere
Fee income on loans - declined from the corresponding period in the prior year primarily due to lower new loan origination volume. Origination and modification fees are recognized over the contractual life of the loan, and the decrease reflects the smaller average portfolio growth and reduced refinancing activity relative to the prior year.
Current report — wording carried from elsewhere
Income from limited liability company investments- no material change from the corresponding period in the prior year. See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements.
Current report — wording carried from elsewhere
Other investment income - Other investment income varies based on the timing of realizations and performance of non-core investment holdings.
Current report — wording carried from elsewhere
Other income - Other income consists primarily of ancillary revenue streams, including property-related income and miscellaneous recoveries. The decrease from the corresponding period in the prior year reflects rent recognized on the Westport, CT investments in developmental real estate during 2025 which were disposed of in December 2025.
Current report — wording carried from elsewhere
Our operating expenses primarily include compensation and benefits for our employees, general and administrative expense including occupancy costs, professional fees for legal, consulting, and advisory services, costs related to investments in developmental real estate, foreclosure pursuits and the resolution and disposition of real estate owned. We monitor operating expenses in relation to profitability and the scale of our loan portfolio. Because origination volume and portfolio size influence the level and impact of operating expenses, we also closely monitor loan origination activity and key loan characteristics, including interest rates, loan-to-value ratios, estimated credit losses, and expected loan duration.
Current report — wording carried from elsewhere
We continue to align operating expense levels with portfolio scale while preserving asset management intensity. As origination activity and earning asset levels increase, we expect to benefit from operating leverage as fixed overhead costs are absorbed over a larger asset base.
Current report — wording carried from elsewhere
Total operating expenses increased from the corresponding period in the prior year as further discussed below.
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Compensation and employee benefits - increased from the corresponding period in the prior year, reflecting strategic additions to personnel during 2025 and performance-based compensation adjustments including stock-based compensation.
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Impairment loss on real estate owned - increased from the corresponding period in the prior year and relates to specific property-level valuation adjustments following updated market data and liquidation timelines.
Current report — wording carried from elsewhere
Gain on sale of investments in developmental real estate, real estate owned and property and equipment, net - increased from the corresponding period in the prior year. Each period reflects gains realized on the disposition of select real estate assets and developmental projects during the period.
Current report — wording carried from elsewhere
Other expenses - decreased from the corresponding period in the prior year and primarily reflect operating costs associated with real estate owned, income taxes, legal matters, public company expenses, and portfolio servicing.
Current report — wording carried from elsewhere
The following table presents the calculation of our book value per common share (in thousands, except share and per share data):